How do I stop my step children eventually inheriting my dosh

[SleepyOwl]

Like many I expect, I am on my second marriage. Lucky enough to have a very large (near £1m) pension pot and currently retired at 58. I have two grown kids as has my current wife. I obviously want to leave my wife financially sound if I die and have split my pension into three. However if she then dies say two days after me then I expect that the proportion going to her would then go to her children

Its not that I dont get on with them, but they have more than enough coming their way where as I am most likely the only source of my children's inheritance, and, therefore want to leave them the max that I can.

Anyone else in this situation or similar and have a solution. I expect at very least it is a re-writing of wills. Just to conclude, my wife also agrees that we need to do something

[SleepyOwl]

Yes I have started doing that. However this will also have an impact on what is left for my wife and also means I pay tax on a greater part of my pension monthly drawdown

[LeadFarmer]

Leave it all to your two sons, and instruct them to pay your wife an amount each month.

I don't actually see how you can prevent your step children inheriting whatever you leave to your wife.

[SleepyOwl]

LeadFarmer said:

Leave it all to your two sons, and instruct them to pay your wife an amount each month.

I don't actually see how you can prevent your step children inheriting whatever you leave to your wife.

That could be the solution. Im not sure how having a "trust" works. Need to google it but it may be the way forward.

[anonymous-user]

Ah, the joys of divorced families and the one thing people give little thought to when they remarry. I worked with a lady whose dad married a younger woman who had two lazy children and it was a source of much anger that the step children were effectively going to inherit it at some point.

[anonymous-user]

You can put your half the assets into trust which your wife has access to after you die but it still remains part of your estate. You’ll need to get a will drawn up though.

My Dad didn’t do this so as soon as he died, my step mother made a will to leave everything to her two kids. He left her several million quid.

[SleepyOwl]

Thanks wormus. I will need to get our will writer back round for an update

[otherman]

I'm in this situation. We're leaving most of our own funds (we hold them separately) to our own children on first death, just leaving enough to each other to keep us comfy.
We both leave our halves of the house too, but with a rule that the survivor can live it in as long as they live, and downsize as long as any cash resulting gets split immiediately. Plus, the kids all know this.

[SleepyOwl]

otherman said:

I'm in this situation. We're leaving most of our own funds (we hold them separately) to our own children on first death, just leaving enough to each other to keep us comfy.
We both leave our halves of the house too, but with a rule that the survivor can live it in as long as they live, and downsize as long as any cash resulting gets split immiediately. Plus, the kids all know this.

We have done the same with the house. We also have separate funds but my wife will inherit where my funds are all earned. She has a low income which I subsidise so she will need funds if I depart anytime before her.

[otherman]

SleepyOwl said:

otherman said:

I'm in this situation. We're leaving most of our own funds (we hold them separately) to our own children on first death, just leaving enough to each other to keep us comfy.
We both leave our halves of the house too, but with a rule that the survivor can live it in as long as they live, and downsize as long as any cash resulting gets split immiediately. Plus, the kids all know this.

We have done the same with the house. We also have separate funds but my wife will inherit where my funds are all earned. She has a low income which I subsidise so she will need funds if I depart anytime before her.

OK, slightly different then. I guess you need to add a pass-one clause then. I used a local solicitor to draw up the will, I'd ask him how best to do it.

[SleepyOwl]

Thanks otherman. Yes, should have made it clear that it is the "cash" side of things only. We have wills and POA all sorted but they need to be updated by the sound of it now that I have retired and have crystalised my pension pot

[theboss]

Bear in mind most wills are quite simple - what you are considering (thinking along the line of trusts) is rather more complex and you'd do well to speak with a specialist in estate planning and also IHT.

You have to consider that as well as providing something for your spouse and children you also want to protect them by avoiding or lessening the scope for dispute and legal claims being made.

Consider also that if you died your wife might remarry and that brings a whole new level of complication such as the prospect that not even your stepchildren get anything

I have a contact in the NW who is sorting my similar requirements (children from first marriage) if you are in that neck of the woods and want a recommendation.

wormus said:

You can put your half the assets into trust which your wife has access to after you die but it still remains part of your estate. You’ll need to get a will drawn up though.

My Dad didn’t do this so as soon as he died, my step mother made a will to leave everything to her two kids. He left her several million quid.

This is exactly what you want to avoid.

Something similar happened in my family a few generations ago - the parent died leaving everything to the step parent who didn't even have any children of her own and left the whole family legacy to some estranged relative. The child of the first marriage got nothing.

Edited by theboss on Tuesday 12th October 22:52

[SleepyOwl]

Cheers for that. VERY good point on the re marrying part. I am in the South West but will certainly get a specialist on this. Its a bit of a minefield by the sounds of it, but must be a very common situation

[phope]

Have you also made an expression of wishes nomination for your pension to reflect your wish for the three-way split, with the pension provider?

https://www.ftadviser.com/opinion/2020/05/05/the-t...

[Sheepshanks]

theboss said:

Consider also that if you died your wife might remarry and that brings a whole new level of complication such as the prospect that not even your stepchildren get anything

Of course that can happen even at a death during a first marriage - a friend of ours lost the family farm and a colleague the family business, that he expected to go into, both when their fathers died relatively young and mothers remarried.

[The Leaper]

phope said:

Have you also made an expression of wishes nomination for your pension to reflect your wish for the three-way split, with the pension provider?

https://www.ftadviser.com/opinion/2020/05/05/the-t...

Which is all very well. However, the nomination is only relevant at the time it is completed. The pension trustees should/would look fully at the beneficiaries/dependents etc at the time of death before deciding on the distribution of benefits under the discretionary trust. The decision could be very different from what's in the latest nomination form especially if the form has been completed a long while ago.

Probably the most important part of the article in the link is that it is imperative that the person completing the nomination regularly reviews it and completes a new nomination should circumstances change. Good pension trustees will send regular reminders, say every 2-3 years, to members that they should be doing this.

R.

[phope]

100% agree

The OP may also wish his advisers to investigate spousal bypass trusts as a way to protect the capital for his own bloodline as it were whilst still giving his wife income and security in event of him dying before her

https://www.pruadviser.co.uk/knowledge-literature/...

[theboss]

Another useful nugget in that link -

"It could also be because the member wants an adult child to benefit but they are concerned that the intended recipient’s marriage is rocky and that if a divorce happened then any lump sum or drawdown could be considered matrimonial property."

[Nickbrapp]

Draw it down and spend most of it over the next 15 years? You won’t need as much in your 70/80s and that’s if you even reach age, you might die when you’re 60.


Don’t think there’s much you can do, set aside £300k and discuss with your wife that is to go to your kids only and explain your reasoning

Probably better to gift to your kids now, I imagine there are in their 20/30s so will be starting out on the housing ladder etc,
Give them a larger deposit so they can get a smaller mortage is a way to make sure it’s not wasted?

[anonymous-user]

Leave them a £100 of cash, some of your worthless yet sentimental items and an old gold ring in your will, this is then your explicit instructions and they can't contest it with a good outcome for them